The Government of Serbia has expanded the carbon tax system with rules on grants for decarbonization and on obtaining tax credits.
The Western Balkans have been under pressure since the beginning of this year, when the European Union’s Carbon Border Adjustment Mechanism (CBAM) came into full force. Only Serbia responded, though modestly, by rolling out taxes on greenhouse gas emissions and carbon-intensive product imports. Both are EUR 4 per ton of CO2 equivalent.
It compares to more than EUR 75 per ton, currently, within the European Emissions Trading System (EU ETS). Nevertheless, General Manager of Elektroprivreda Srbije Dušan Živković has estimated that the new domestic tax would cost the Serbian state-owned power utility a whopping EUR 100 million this year.
The latest additions are the decrees on grants to companies for decarbonization and on obtaining tax credits. Under increasingly pronounced climate requirements in the European market, Serbia is taking measures to provide domestic companies with a predictable and gradual process of adaptation to new rules, while preserving competitiveness and encouraging investments in modern technologies, Minister of Environmental Protection Sara Pavkov said.
“By adopting these decrees, the government shows that it wants to implement the green transition process together with companies, through concrete support mechanisms that will enable new investments, the introduction of modern technologies, and the preservation of the competitiveness of domestic companies. Our goal is to provide the economy with a predictable and gradual process of adaptation to new European standards, while simultaneously encouraging sustainable economic development,” she stressed.
Upcoming public calls for grants
The directive on the conditions, deadlines and reporting for decarbonization incentives stipulates awarding grants from the state budget for measures contributing to greenhouse gas emissions reduction or the energy efficiency of industrial activities.
The funds are allocated for projects, in accordance with the share of their sectors in total greenhouse gas emissions, whereby a deviation from such allocation is permitted only in the case of insufficient availability of projects that meet the prescribed conditions and the required level of readiness for implementation.
Eligible technologies include CCUS and hydrogen
Among the eligible activities are the production and use of hydrogen, hydrogen-based and low-carbon fuel, renewable energy production, storing energy, measures for flexible electrification of energy consumption, investing in carbon capture equipment, CO2 capture, utilization and storage (CCS or CCUS).
The ministry is responsible for conducting public calls.
If the authorities determine that the funds were misappropriated, misallocated or if an investment results in 80% or less of the planned emissions reduction, the ministry terminates the contracts and demands refunds. The legislation will be in force for ten years.
Stimulus for investments in green tech
The decree on lowering CO2-equivalent emissions and reporting on conducted measures enables systemic support to companies in the decarbonization process and stimulates investments in green technologies, the ministry said.
Carbon credits can be obtained through investments in electricity or heat production from renewables, energy storage including heat and hydrogen, introducing technical solutions for the flexibility and stability of the energy system, and the development of the transmission and distribution power grid for the deployment of renewable sources. One section is for retiring thermal power capacities.
